This discussion summarizes a proposed approach to disseminating ParagonsDAO’s Staking Rewards, as discussed and directionally agreed with the Treasury Council on January 12, 19, and 30, 2023.
As laid out in the initial staking model design from March 2022, 30% of the Initial PRIME Rewards we receive will be dedicated to funding staking rewards (this includes Prime Event rewards for EADAs/Prime Sets as well as the first year of Caching).
Our latest estimate of the Initial PRIME Rewards we’ll receive is approximately 1,185,100 PRIME (this is almost 10% higher than our previous working assumption of 1,080,000 PRIME, as a result of our continued acquisition and caching of Parallel assets).
30% of that (to be dedicated to staking rewards) is 350,130 PRIME. The intention, as laid out in the initial proposal, is to distribute Initial PRIME Rewards over a 12-month period.
Part 1 - Year 1 Prime Reward funding
We recommend making Staking Reward Epochs 1 month long, in order to provide regular distributions of PRIME to the community of PDT stakers. Initially, we were under the impression that PRIME would only be distributed from Echelon on a quarterly cycle, and therefore had previously communicated our proposed staking model as such.
As that is not the case, we are not restricted by such quarterly timeframes for our own staking rewards. Monthly distributions to stakers is more attractive and allows stakers to more regularly reap the rewards of staking.
We recommend smoothing the funding of our Initial Prime Rewards over 12 months, with a slight additional weighting in Epoch 1 to recognize that many stakers have been staking their $PDT without returns since late September 2022 as we’ve been waiting for PRIME to unlock. However, we propose that this weighting reflect only a small additional time period (60 days instead of 30) for these reasons:
- Early stakers have been building their multiplier and will get a greater percentage of rewards already
- New stakers could collect an outsized benefit from an Epoch 1 pool funded to recognize pre-Epoch 1 stakers
In practice, that means Epoch 1 would be funded based on a weighted of 15.38% of the total Initial PRIME Rewards pool (~54,692 PRIME), and Epochs 2-13 would be weighted at 7.69% of the pool (~27,346 PRIME).
This funding does not account for continued Prime Set caching rewards (via Echelon’s Prime Sinks), nor does it account for revenues we’ll earn in PRIME from our play-to-earn model. Therefore, we expect that once we start earning those revenues later in 2023, we can increase PRIME rewards in later reward pools during year 1 (and/or use those revenues to ensure sustainability of staking rewards into year 2/Epoch 13+).
We intend to provide a proposal around usage of PRIME Sink throughput for staking rewards before they come online. Once modelled, and we will retroactively capture any PRIME emitted through sinks as part of that proposal.
You can review funding assumptions and modelling in this document, including this scenario (referred to as Scenario 4) and 3 other scenarios the Treasury Council has discussed. We feel Scenario 4 best balances sustainability of staking rewards and an acknowledgement that many will have been staking for over 5 months without reward, while minimizing risks of users gaming the system.
Proposed Epoch funding (green)
Part 1 will be a simple Treasury Council vote following consideration of community feedback.
Part 2 - PCCP 2: Repurposing retroactive rewards to reward active stakers
The initial staking model design outlined a retroactive reward for early PDT holders, as 10% of the 30% staking rewards from Prime Event 1 (totalling 7,680 PRIME) to be distributed to over 1,200 holders at the time.
As noted in several areas of that proposal, the purpose was to reward long-term holders/supporters. However, in retrospect, a retroactive reward for those who held PDT on February 11, 2022—three weeks after token launch (January 24, 2022)—does not reward long-term holders/supporters.
As such, we’re proposing that this retroactive reward (7,680 PRIME total) remains in the staking rewards pool to reward loyal $PDT holders, particularly, those who have participated in staking, with PRIME.
- $PDT stakers (closer to 400 holders) represent the most loyal holders who have actively participated in the actions intended to receive staking rewards.
- Out of the $PDT holders from February 11, 2022, many have exited their $PDT positions and given up their governance power. We should not be beholden to people with no stake in our ecosystem
- For those who have remained (and staked), this proposal is much more attractive. By including this 7,680 PRIME in the staking pool for year 1 (rather than removing it to pay retroactive rewards), this more limited group of stakers receives a larger portion of that 7,680 PRIME. This also encourages the intended action (staking) this reward was designed for in the first place.
In short, rewarding those who have not held or staked $PDT with our PRIME revenues would be a disservice to $PDT holders, and those who have staked $PDT benefit more from this proposal.
Part 2 is a ParagonsDAO Configuration Change Proposal (PCCP) as it seeks to change something that was voted in by the community in March 2022. That means that following consideration of community feedback, it will undergo both a Paragons Council and Treasury Council vote.